Blencowe Resources: Aspiring to become one of the largest graphite producers in the world. Watch the video here.
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OR: "The SM business case was rather compelling. It remains just as compelling today."
I have been believing in the SM business case for a long time.
However, the problems encountered in fundraising over the past year have greatly reduced my confidence.
The issue of the quality of the TorPs seems to be a real issue, as the rating agency only recognized the ADM torp at the time; and the potential h.y.bond investors seemed also not positive on this. The gov also seemed not confident enough on the cash flow in 2021 or 2022 as promised in the SM original plan, as the gov considered it a great danger for the taxpayers' money (for the guarantee) even if to provide the guarantee at a later time when another $2b invested (which is much bigger than the $600m that SM claimed to be able to re-risk the project and support the following-up debt funding).
The CEO of AAL also mentioned that marketing is the main challenge, and this seems that in his mind this is more challenging than the risk of the deep shafts.
SM made an updated plan saying a $600m would derisk the deep shafts; however, it seems that they are not confident enough about this given the fact that they take preference of the full funding guarantee of the AAL deal than other short-term funding options around $600m. If $600m can dig the deep shafts from 45m to the bottom and help SM start to produce Poly4, the shaft constructor should have signed a fixed cost contract on the deep shafts with the additional $500m, rather than only with the tunnel constructor signed a less risky tunnel fixed cost contract. Clear, additional $500m was not enough to let DMC confident enough to reach the bottom of the deep shafts and therefore signing a fixed cost contract. This means that even if SM gets a short term bridging fund of $600m; the risk of the deep mines may still remain, and the following-up funding difficulty would still remain.
Although I am not happy with the AAL deal that would push all the shareholders out with only 1/3 of the price in the most recent open offer, and 1/4 of the stage one open offer, I am still glad that at least there is one big mining company interest in the project, which may indicate that the SM business case may not as compelling as SM/CF promoted, but still a somewhat compelling if an experienced and powerful mining company is willing to provide the full funding and take all the risks and challenges to complete the project.
Hopefully, AAL would finally agree to treat existing shareholders, especially the large number of PIs better by making some improvements on their offer before the voting (or after the voting, if there is still a chance to do so; which seems only possible in case a counter offer emerging after the voting; the chance seems low at the moment).
The SM business case was rather compelling. It remains just as compelling today.
I take full responsibility for the number of shares that I hold. My diversification comes from owning properties rather than other stocks.
I would readily accept the AAL offer if I thought it was fair and reasonable. It is not. I believe it to be opportunistic at best and potentially a potash cartel play. Time will tell on that one.
SM have failed because CF failed to attract Stage 2 funding. Brexit uncertainty caused by our government’s inept strategy for delivering on the result of the 2016 referendum will have played a part. Had the government no been stronger and spoken with one voice, Brexit would have been delivered in March 2019. The junk bond markets would have been more likely to support the cash raise.
I don’t want the BoD to benefit from the sale of our mine. And I’m prepared to throw my No vote in to the ring. Whatever the outcome of the vote I will sleep well knowing that I acted in line with my conscience. That is democracy.
I will not be bullied in to voting for something that I do not believe is right.
OR